Localizing the Economy the Nation's Economic Policy Should Focus on Commercializing Existing Technology, Using Extension Services That Most of the States Already Have

Article excerpt

NOW that President-elect Clinton has selected his senior economic advisers, led by highly regarded Sen. Lloyd Bentsen of Texas and New York investment banker Robert Rubin, he must turn to the difficult task of implementing an economic plan for American renewal and growth. In doing so, Mr. Clinton must choose between a highly centralized economic strategy driven by Washington agency bureaucrats and federal categorical programs or a locally based strategy that empowers communities and local decisionmakers across the country.

The Clinton administration should resist the mistaken but beguiling notion that America can be rebuilt from Washington. Pressure for a centrally managed industrial policy will come from many sources, including congressional leaders, federal policy experts looking for new programs to run, and big business. These forces were evident this year when Congress, confronted with large losses of jobs and industrial capacity due to a declining defense budget, took its first step toward an industrial strategy by providing $1.6 billion in transitional assistance to defense firms and workers. But what began as a promising endeavor resulted in 26 separate categorical programs. Several new programs will take more than a year to put into operation, long after many defense firms cease to exist.

This cumbersome, fragmented, and ineffective approach reflects a well-intended but counterproductive disposition to address every challenge with a separate program.

In fashioning a new industrial strategy, federal lawmakers should consider the advantages of decentralizing management and streamlining administration to foster grass-roots economic development.

First, states have working relationships with the private sector and have proven programs in place, run by seasoned professionals who know how to use government resources to leverage private investment. Federal initiatives to bolster existing state and local programs would build an industrial strategy from the bottom up. Building a dual system with centralized decisionmaking in Washington would be wasteful and time-consuming.

Second, technology transfer between public research institutions and the private sector does not generally take place in Washington. Technology transfer is a labor-intensive, locally originated endeavor. Creating new commercial research authorities in Washington is not as productive as building thousands of local bridges between public research and private interests across the country.

Congress already spends $76 billion annually on research and development - four times its annual investment in highways and mass transit. While this funding supports more than 700 federal laboratories and research at hundreds of universities, virtually none of it is spent on technology transfer.

Before we create new federal research authorities in Washington, let's focus on commercializing existing technology. …